napa county resource conservation district...

NAPA COUNTY RESOURCE

CONSERVATION DISTRICT

FINANCIAL STATEMENTS

JUNE 30, 2015



TABLE OF CONTENTS

Independent Auditor’s Report 1-2

Management Discussion and Analysis 3-6

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position 7

Statement of Activities 8

Fund Financial Statements:

Governmental Fund:

Balance Sheet 9

Reconciliation of the Governmental Fund Balance Sheet to the

Government-Wide Statement of Net Position – Governmental Activities 10

Statement of Revenues, Expenditures and Changes in Fund Balance 11

Reconciliation of the Statement of Revenues, Expenditures and Changes

In Fund Balance of Governmental Fund to the Government-Wide

Statement of Activities – Governmental Activities 12

Notes to the Financial Statements 13

Required Supplementary Information:

Budgetary Comparison Schedule:

General Fund 24

Schedule of the District’s Proportionate Share of the Net Pension Liability 25

Schedule of the District Pension Contributions 26

Note to the Required Supplementary Information 27

Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial

Statements Performed in Accordance With Government

Auditing Standards 28-29

1

LARRY BAIN, CPA An Accounting Corporation

2148 Frascati Drive, El Dorado Hills, CA / 916.601-8894

[email protected]

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors

Napa County Resource Conservation District

Napa, CA

We have audited the accompanying financial statements of the governmental activities and fund information

which comprise the basic financial statements of Napa County Resource Conservation District as of and for

the fiscal year ended June 30, 2015, as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with accounting principles generally accepted in the United States of America; this includes

the design, implementation, and maintenance of internal control relevant to the preparation and fair

presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted

our audit in accordance with auditing standards generally accepted in the United States of America and

the standards applicable to financial audits contained in Government Auditing Standards, issued by the

Comptroller General of the United States. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the financial statements in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control. Accordingly, we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of significant accounting estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinions.

Opinions

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the

respective financial position of the governmental activities and fund information of the Napa County

Resource Conservation District as of June 30, 2015, and the changes in financial position, of those activities

and funds for the fiscal year then ended in conformity with U.S. generally accepted accounting principles.

mailto:[email protected]

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Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s

discussion and analysis on pages 3–6, the budgetary comparison for the General fund on page 24 the Napa

County Resource Conservation District Employees’ Retirement System Schedule of the District’s

Proportionate Share of the Net Pension Liability and the Retirement System Schedule of the District’s

Contributions on pages 25 and 26,; be presented to supplement the basic financial statements. Such

information, although not a part of the basic financial statements, is required by the Governmental

Accounting Standards Board (GASB), who considers it to be an essential part of financial reporting for

placing the basic financial statements in an appropriate operational, economic, or historical context. We

have applied certain limited procedures to the required supplementary information in accordance with

auditing standards generally accepted in the United States of America, which consisted of inquiries of

management about the methods of preparing the information and comparing the information for consistency

with management’s responses to our inquiries, the basic financial statements, and other knowledge we

obtained during our audit of the basic financial statements. We do not express an opinion or provide any

assurance on the information because the limited procedures do not provide us with sufficient evidence to

express an opinion or provide any assurance.

Implementation of New Accounting Standards

As disclosed in the Note 1 to the financial statements, the Napa County Resource Conservation District

implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment

of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made

Subsequent to the Measurement Date – an amendment of GASB Statement No. 68, during the fiscal year

2015.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 22, 2015

on our consideration of the Napa County Resource Conservation District’s internal control over financial

reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant

agreements and other matters. The purpose of that report is to describe the scope of our testing of internal

control over financial reporting and compliance and the results of that testing, and not to provide an opinion

on internal control over financial reporting or on compliance. That report is an integral part of an audit

performed in accordance with Government Auditing Standards in considering Napa County Resource

Conservation District’s internal control over financial reporting and compliance.

Larry Bain, CPA

An Accounting Corporation

October 22, 2015

Napa County Resource Conservation District 1303 Jefferson St., Ste. 500B

Napa, California 94559 Phone: (707) 252-4188

Fax: (707) 252-4219 www.naparcd.org

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Management’s Discussion and Analysis

October 22, 2015

As management of the Napa County Resource Conservation District (District), we offer the following

summary analysis (Analysis) to the financial statements for the period July 1, 2014 to June 30, 2015

(hereinafter referred to as Fiscal Year 2015). This Analysis is intended to provide an overview of the

District’s financial activity, focus on significant financial issues, and identify major changes in the District’s

financial position.

Financial Highlights for Fiscal Year 2015

New Significant Accounting Standards Implemented:

In Fiscal Year 2015, the District implemented two new statements of financial accounting standards

issued by the Governmental Accounting Standards Board (GASB) that relate to pension activity:

Statement No. 68, “Accounting and Financial Reporting for Pensions—an amendment of GASB

Statement No. 27,” and

Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date—

an amendment of GASB Statement No. 68”

Statement No. 68 (Statement) establishes standards of accounting and financial reporting, but not funding

or budgetary standards, for the District’s defined benefit pension plans. This Statement replaces the

requirements of prior GASB statements impacting accounting and disclosure of pensions.

The significant impact to the District of implementing Statement No. 68 is the reporting of the District’s

unfunded pension liability on the District’s full accrual basis of accounting government-wide financial

statements. There are also new note disclosure requirements and supplementary schedules required by

the Statement. See Note 6 of the Audit Report.

The measurement date for the pension liabilities is as of June 30, 2014. This date reflects a one year lag

and was used so that these financial statements could be issued in an expedient manner. Activity (i.e.,

contributions made by the District) occurring during Fiscal Year 2015 are reported as deferred outflows

of resources in accordance with Statement No. 71.

In order to implement the Statement, a prior period adjustment was made to the District’s July 1, 2014 net

position. This prior period adjustment decreased the District’s net position by $607,075 from $1,240,705

to $633,630 and reflects the reporting of: (1) net pension liabilities of $565,975 and (2) deferred outflows

of resources of $41,100.

The adoption of Statement No. 68 has no impact on the District’s governmental fund financial statements,

which continue to report expenditures equal to the amount of the District’s actuarially determined

contribution (formerly referred to as the “annual required contribution”). The calculation of pension

contributions is also unaffected by this Statement.

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Additional Highlights:

During Fiscal Year 2015, the District had expenses of $1,439,705 and earned $1,459,436 in program, tax and other

revenues resulting in $22,160 net revenue. After factoring in requirements from GASB #68 and #71, which requires

the District to report our net pension liability, the District’s total net position increased by $85,135.

At the end of Fiscal Year 2015, the general fund had a fund balance of $772,193.

The District purchased a truck, resulting in an addition of $28,614 to capital assets in Fiscal Year 2015.

The major financial components for the fiscal year ending June 30, 2015 are shown below:

Revenues for Fiscal Year 2015 ($ 1,459,436)

Program revenues (79%) include charges for services under grant contracts to private entities (e.g., non-profits,

businesses) and to state, local and federal agencies ($1,018,591), as well as income from the District’s demonstration

vineyard ($133,841). General revenues (21%) include county taxes ($282,949), interest on funds invested in the

county’s pooled fund and other miscellaneous sources ($24,055).

Expenses for Fiscal Year 2015 ($ 1,374,301)

Expenses for the District are broken down as follows: Personnel services (61%, $828,614, net of $62,975 pension

expense adjustment); Grant Services and Supplies (37%, $531,564); Depreciation (1%, $13,387); and Interest ($736).

Condensed Financial Information

The following financial information is a condensed version of the Audit Report. The Notes to the Financial

Statements in the Audit Report provide additional information that is essential to a full understanding of the data

provided in the basic financial statements.

Statement of Net Position

The Statement of Net Position (including assets and liabilities) and the Governmental Fund Balance Sheet are found

in the Audit Report. The Condensed Statement of Net Position, shown in Table 1 below, presents information on all

of the District’s assets and liabilities, with the difference between the two reported as total net position. Over time,

changes in total net position may serve as a useful indicator of whether the financial position of the District is

improving or declining. In Fiscal Year 2015, total net position is significantly less than it was in Fiscal Year 2014

due to implementation of GASB #68 and #71 which requires reporting of pension liability, which are included in

non-current liabilities below.

Table 1 Condensed Statement of Net Position 2014/2015 2013/2014

Current and other assets $1,001,896 $ 1,064,284

Land 350,100 350,100

Other capital assets, net of depreciation 64,269 49,042

Deferred outflows - pensions 182,577 -

Total Assets & Deferred Outflows $1,598,842 $ 1,463,426

Current liabilities $ 104,553 $ 170,676

Non-current liabilities 671,657 52,045

Deferred inflows of resources 103,867 -

Total Liabilities& Deferred Inflows $ 880,077 222,721

Total Net Position $ 718,765 $ 1,240,705

Breakdown of Total Net Position:

Net investment in capital assets $ 396,630 $ 372,981

Unrestricted assets 322,135 867,814

Total Net Position $ 718,765 $ 1,240,705

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Change in Net Position

The Statement of Activities and Governmental Fund Revenues, Expenditures, and Changes in Fund Balance are

found in the Audit Report. The Condensed Statement of Activities, shown in Table 2, presents information showing

how the District’s net position changed during the fiscal year. The Statement of Activities in the Audit Report also

provides important information on the District’s governmental activities, how these services were financed in the

short term and what remains for future spending.

Table 2 Condensed Statement of Activities 2014/2015 2013/2014

Total Program Revenues $1,152,432 $1, 171,072

Total General Revenues 307,004 290,778

Total Revenues $1,459,436 $1,461,850

Total operating expenses $ 1,374,301 $1,404,723

Change in Net Position $ 85,135 $ 57,127

For Table 2, Program Revenues include charges for services under grant contracts to private entities (e.g., non-profits,

businesses) and to state, local and federal agencies, as well as income from the District’s demonstration vineyard.

General Revenues include property tax, investment income and miscellaneous sources such as donations and

fundraising events.

Actual Compared to Budget

The Budgetary Comparison Schedule of the Audit Report, and summarized in Table 3 of this Analysis, reviews all

actual revenues received within 90 days of the end of the fiscal year and expenditures for the fiscal year and compares

them to the annual budget. The District’s actual expenditures exceeded actual revenue by $53,456 for the fiscal year.

Table 3 Actual Compared to Budget-General Funds

Favorable

Original Final Actual (Unfavorable)

Budget Budget Amount Variance

Intergovernmental Revenue $1,253,035 $1,083,058 $ 969,143* $ (113,915)

Tax Revenue 262,600 262,600 282,949 20,349

Use of Money/Property Revenue 120,000 133,000 137,579 4,579

Miscellaneous Revenue 23,500 19,500 20,317 817

Total Revenues $1,659,135 $1,498,158 $1,409,988 $ (88,170)

Total Expenses $1,748,314 $ 1,525,397 $1,463,444 $ 61,953

Net excess/(deficiency) $ (89,179) $ (27,239) $ (53,456) $ (26,217)

* Intergovernmental revenue includes only those earned revenues that are received within 90 days from the end of

the fiscal year. As of September 30, 2015, 90 days after the end of the fiscal year, the District had $117,407 in

outstanding invoices that we anticipate will be paid within 120 days of the end of the fiscal year. Delays in payment

are primarily due to the structure of our grant contracts. If all earned revenues and outstanding invoices had been paid

within the 90 day required period, total revenue would have been $1,527,395 and revenue would have exceeded

expenses by $63,951.

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Capital Assets

At the end of fiscal year 2014-2015, the District had $414,368 in capital assets, including land, computer equipment,

a vehicle, and vineyard and field equipment (including depreciation). This amount represents a net increase of

$15,226 over the previous fiscal year.

Table 4 Capital Assets at Year-end (Net of Depreciation, in dollars)

2014-2015 2013-2014

Land $ 350,100 $ 350,100

Land improvements 0 1,617

Computer Equipment 0 2,012

Vehicles 26,668 2,310

Hydrologic Equipment 0 0

Vineyard & Field Equipment 37,601 43,103

Total capital assets $ 414,369 $ 399,142

There was one major addition to capital assets in Fiscal Year 2015. The District purchased a new vehicle in the

amount of $28,613.63.

Deferred Inflows of Resources

At the end of fiscal year 2014-2015 the District had $125,150 in deferred inflows of resources (the previous term for

this was Deferred Revenue). The Deferred Inflows of Resources is broken down into two categories. Unearned

Revenue in the amount of $7,743 reflects money we received in advance for specific services, but have not yet earned.

Unavailable Revenue in the amount of $117,407 is money that we have earned but have not yet received (e.g.,

outstanding invoices that were not paid within ninety days of the end of the fiscal year and funds that are retained by

granting agency until the end of contracts).

Debt

The District’s Loan payable consist of a loan agreement with the State Revolving Fund Loan Program, dated May

23, 1997 and is due in annual installments of $9,248 on July 23 at an interest rate of 2.8%. The proceeds were used

for District improvements. The balance at June 30, 2015 was $ 17,739.

Table 5 Outstanding Debt at Year-end

2014-2015 2013-2014

State Revolving Fund Loan $ 17,739 $ 26,251

Economic Factors and Fiscal Year 2015 Budget

The District Board and management considered many factors when determining the budget for Fiscal Year 2016

(July 1, 2015 – June 30, 2016). Revenue was estimated on the basis of prior years' experience and our expectations

for grant and fee-for-service funding in this and subsequent years. The budget assumes addition of one full-time staff

member to be added mid-year and includes purchase of a new server.

District management believes that the revenue assumptions underlying our budget are conservative. Among the

possible funding sources we have identified for Fiscal Year 2016, the budget includes only those already committed

to be available this year, and tax revenues are projected to remain the same as the previous year. The District estimates

revenue and expenses for Fiscal Year 2016 to be $1,418,200. Budget amendments will be made throughout Fiscal

Year 2016 as necessary.

Contacting the District’s Financial Management

This Analysis is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the

District’s finances and to show the District’s accountability for the money it receives. If you have any questions

about this report or need additional financial information, contact the District at 1303 Jefferson Street, Suite 500B,

Napa, CA 94559 (707) 252-4188.

NAPA COUNTY RESOURCE CONSERVATION DISTRICT

STATEMENT OF NET POSITION

JUNE 30, 2015

The notes to the financial statements are an integral part of this statement

7

Governmental

Activities

Assets

Cash and investments $ 719,365

Imprest cash 300

Grants and other receivables 275,047

Prepaid insurance 5,184

Prepaid expense 2,000

Total Current Asset 1,001,896

Noncurrent assets

Capital assets-net 414,369

Total Assets 1,416,265

Deferred outflows of resources

Deferred outflows-pensions 182,577

Total Assets and Deferred Outflows of Resources $ 1,598,842

Liabilities

Current liabilities:

Accounts payables $ 57,334

Accrued payroll 47,219

Total Current Liabilities 104,553

Noncurrent liabilities:

Due within one year 31,186

Due in more than one year 640,472

Total Noncurrent Liabilities 671,657

Total Liabilities 776,210

Deferred inflows of resources

Deferred revenue-advances 7,743

Deferred inflows-pensions 96,124

Total Deferred inflows of resources 103,867

Net Position

Net investment in capital assets 396,630

Unrestricted 322,135

Total Net Position 718,765

Total Liabilities, Deferred inflows

of Resources and Net Position $ 1,598,842


STATEMENT OF ACTIVITIES

JUNE 30, 2015


8

Charges for Operating Grants

Expenses Services and Contributions Total

Governmental Activities:

Natural resource conservation $ 1,373,565 $ 133,841 $ 1,018,591 $ (221,133)

Interest expense 736 (736)

Total Governmental Activities $ 1,374,301 $ 133,841 $ 1,018,591 (221,869)

`

General Revenues:

Property tax, levied for general purposes 282,949

Investment income 3,738

Miscellaneous 20,317

Total general revenues 307,004

Change in net position 85,135

Net position restated - beginning 1,240,705

Prior period adjustment (607,075)

Net position - ending $ 718,765

Program Revenues


GOVERNMENTAL FUND

BALANCE SHEET

JUNE 30, 2015


9

General

Fund

Assets

Cash and investments $ 719,365

Imprest cash 300

Prepaid expenses 7,184

Grants and other receivables 275,047

Total Assets $ 1,001,896

Liabilities

Accounts payable and accrued expenses $ 57,334

Accrued payroll 47,219

Total Liabilities 104,553

Deferred Inflows of Resources

Unearned revenue-grants and contributions 7,743

Unavailable revenue-operating grants 117,407

Total Deferred Inflows of Resources 125,150

Fund balances

Restricted for imprest cash 300

Nonspendable-prepaid expenses 7,184

Assigned for next year budget 89,179

Unassigned 675,530

Total Fund Balances 772,193

Total Liabilities, Deferred Inflows of

Resources and Fund Balances $ 1,001,896


RECONCILIATION OF GOVERNMENTAL FUND BALANCE SHEET

TO THE STATEMENT OF NET POSITION

JUNE 30, 2015


10

Total Fund Balances of governmental funds $ 772,193

Amounts reported for governmental activities in the Statement of Net Position are

different because:

Capital assets used in governmental activities are not financial resources

and therefore are not reported in the funds. 414,369

Deferred outflows of resources related to pensions are recorded as as deferred outflows

in the government wide financial statements and are not recorded in the funds 182,577

Long-term obligations are not due and payable in the current period and therefore are not

reported in the governmental funds. (671,657)

Certain revenues received after ninety days from the end of the fiscal year are recorded

as deferred revenue in the funds and as revenues in the government wide statement. 21,283

Net position of governmental activities $ 718,765


GOVERNMENTAL FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

JUNE 30, 2015


11

General

Fund

Revenues

Taxes $ 282,949

Intergovernmental 969,143

Use of money and property 137,579

Miscellaneous 20,317

Total Revenues 1,409,988

Expenditures Paid

Salaries and benefits 894,018

Services and supplies 531,564

Debt service

Principal 8,512

Interest 736

Capital outlay 28,614

Total Expenditures 1,463,444

Net Change in Fund Balance (53,456)

Fund Balance, July 1, 2014 825,649

Fund Balance, June 30, 2015 $ 772,193


RECONCILIATION OF GOVERNMENTAL FUND STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCE

TO THE STATEMENT OF ACTIVITIES

JUNE 30, 2015


12

Net Change in Fund Balance - Total Governmental Funds $ (53,456)

Amounts reported for governmental activities in the Statement of Activities

differs from the amounts reported in the Statement of Revenues, Expenditures

and Changes in Fund Balances because:

Governmental funds report capital outlays as expenditures. However, in the

Statement of Activities. The costs of those assets is allocated over their

estimated useful lives as depreciation expense or are allocated to the

appropriate functional expense when the cost is below the capitalization

threshold. This activity is reconciled as follows:

Capital outlay 28,614

Current year depreciation expense (13,387)

Changes in compensated absences do not effect expenditures in the governmental funds

but the change is adjusted through salary expense in the Statement of Net Position 2,429

Changes in long-term debt do not effect liabilities in the governmental funds, but the

change is adjusted through principal expense in the Statement of Net Position 8,512

Changes in proportions from the pension do not effect expenditures in the governmental

funds, but the change is adjusted through expense in the governement wide statement. 62,975

Certain revenues received after ninety days from the end of the fiscal year are recorded

as deferred revenue in the funds and as revenues in the government wide statement. 49,448

Change in net position of governmental activities $ 85,135



Notes to the Financial Statements

June 30, 2015

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Note 1: Summary of Significant Accounting Policies

The Napa County Soil Conservation District (District) was organized on June 5, 1945, under Article 1.5, Division IX

(currently Chapter 3, Division 9) of the Public Resources Code of the State of California. On December 14, 1971, the

Board of Directors (Board) changed the District’s name to the Napa County Resource Conservation District. The District

is organized for the purposes in open areas, agricultural areas, urban development, wildlife areas, recreational

developments, watershed management, the protection of water quality and water reclamation, the development of

storage and distribution of water, and the treatment of each acre of land according to its needs. The District is governed

by a Board of Directors that is selected pursuant to Government Code Section 1780. The basic operations of the District

are financed by federal and state grants and local grants administered through Napa County.

The accounting policies of the Napa County Resource Conservation District conform to accounting principles generally

accepted in the United States of America, as applicable to governmental units. The following is a summary of the more

significant policies:

A. Reporting Entity

The District has defined its reporting entity in accordance with U. S. generally accepted accounting principles, which

provides guidance for determining which governmental activities, organizations, and functions should be included in

the reporting entity. In evaluating how to define the District for financial reporting purposes, management has considered

all potential component units. The primary criterion for including a potential component unit within the reporting entity

is the governing body’s financial accountability. A primary governmental entity is financially accountable if it appoints

a voting majority of a component unit’s governing body and it is able to impose its will on the component unit, or if

there is a potential for the component unit to provide specific financial benefits to, or impose specific financial burdens

on, the primary government. A primary government may also be financially accountable if a component unit is fiscally

dependent on the primary governmental entity regardless of whether the component unit has a separately elected

governing board, a governing board appointed by a higher level of government, or a jointly appointed board.

No operations of other entities met the aforementioned oversight criteria for inclusion or exclusion from the

accompanying financial statements in accordance with GASB Statement No. 61.

B. Basis of Presentation

Government-Wide Financial Statements

The statement of net position and statement of activities display information about the primary government (the District).

These statements include the financial activities of the overall government. Governmental activities are normally are

supported by taxes and intergovernmental revenues.

The statement of activities demonstrates the degree to which the program expenses of a given function are offset by

program revenues. Program expenses include direct expenses, which are clearly identifiable with a specific function.

Program revenues include 1) charges paid by the recipient of goods or services offered by the programs and 2) grants

and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues

that are not classified as program revenues, including all taxes, are presented instead as general revenues.

When both restricted and unrestricted net position are available, unrestricted resources are used only after the restricted

resources are depleted.

Fund Financial Statements




June 30, 2015

14

Note 1: Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation (Continued)

The fund financial statements provide information about the District’s funds. The emphasis of fund financial statements

is on major governmental funds, each displayed in separate columns. All remaining governmental funds are separately

aggregated and reported as nonmajor funds.

The District reports the following governmental fund:

General Fund - This fund accounts for all the financial resources not required to be accounted for in another fund.

This fund consists primarily of general government type activities.

C. Basis of Accounting

The government-wide financial statements are reported using the economic resources measurement focus and the

accrual basis of accounting. Revenues are recorded when earned or, for property tax revenues, in the period for which

levied. Expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Revenues from

grants, entitlements and donations are recognized in the fiscal year in which all eligible requirements have been satisfied.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual

basis of accounting. Revenues are recognized when both measurable and available. Measurable means the amount of

the transaction can be determined and available means collectible in the current period or soon enough thereafter to be

used to pay liabilities of the current period. Resources not available to finance expenditures and commitments of the

current period are recognized as deferred revenue or as a reservation of fund balance. The District considers property

taxes available if they are collected within sixty-days after fiscal year-end.

Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt,

as well as compensated absences and claims and judgments are recorded only when payment is due. General capital

acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases

are reported as other financial sources.

When applicable, the District reports deferred revenue on its combined balance sheet. Deferred revenue arises when

a potential revenue source does not meet both the measurable and available criteria for recognition in the current

period. Other than property taxes, the District considers revenue available if received within ninety-days after fiscal

year end. Deferred revenues also arise when resources are received by the District before it has legal claim to them,

as when grant monies are received prior to the occurrences of qualifying expenditures. In subsequent periods, when

both revenue recognition criteria are met, or when the District has legal claim to the resources, deferred revenue is

removed from the combined balance sheet and revenue is recognized.




June 30, 2015

15


D. Grants Receivable

Grant revenue is recognized when program expenditures are incurred in accordance with program guidelines. Such

revenue is subject to review by the funding agency and may result in disallowance in subsequent periods.

E. Capital Assets

Capital assets have been acquired for general District purposes. Assets purchased are recorded as expenditures in the

governmental funds and capitalized at cost or estimated cost where no historical records are available. The District

defines capital assets as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess

of one year. Capital assets are depreciated using the straight-line method over their estimated useful lives. The useful

lives are as follows:

Land Improvements 20 years

Computer Equipment 3 years

Hydrologic Equipment 5 years

Field Equipment 7-20 years

F. Property Taxes

The District receives property taxes from the County of Napa (County), which has been assigned the responsibility

for assessment, collection, and apportionment of property taxes for all taxing jurisdictions within the County. Secured

property taxes are levied on July 1 for the following fiscal year and on which date it becomes a lien on real property.

Secured property taxes are due in two installments on November 1 and February 1 and are delinquent after December

10 and April 10. Property taxes on unsecured roll are due on the July 1 lien date and become delinquent if unpaid by

August 31.

The District participates in the County’s “Teeter Plan” method of property tax distribution and this receives 100% of

the District’s apportionment each fiscal year, eliminating the need for an allowance for uncollectible. The County, in

return, receives all penalties and interest on the related delinquent taxes. Under the Teeter Plan, the County remits

property taxes to the District based on assessments, not on collections, according to the following minimum schedule:

55 percent in December, 40 percent in April, and 5 percent at the end of the fiscal year. Property tax is recognized

when it is available and measurable. The District considers property tax as available if it is received within 60 days

after fiscal year end.

G. Fund Equity

The unassigned fund balances for governmental fund represents the amount available for budgeting future operations.

Unrestricted net position represents the net position available for future operations.

Restrictions of fund balances of governmental funds are established to either (1) satisfy legal covenants that require

a portion of fund balance to be segregated or (2) identify the portion of the fund balance that is not appropriable for

future expenditures.

Restricted net position represents the net position legally identified for specific purposes.




June 30, 2015

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H. Compensated Absences

Employee’s eligible for paid leave, which includes leave for vacation, sick days and personal necessities, include full

time and part time employees that work a minimum of 20 hours per week.

During the first five years of employment, a full time employee earns seventy-eight (78) hours of vacation and sick

leave each per year and cannot carry more than eighty (80) hours into the next calendar year. Those employed five to

ten years and are full time with the District earn one hundred seventeen (117) hours and may not carry more than one

hundred and twenty (120) into the next calendar year. For those employed over ten years and are full time with the

District earn one hundred and fifty six (156) hours and may not carry more than one hundred and sixty (160) hours into

the next calendar year. Upon termination of employment from the District, an employee will be paid for vacation time

accrued through the employee’s last day on the payroll. No portion of accrued sick leave is paid out at termination. No

current portion of this the accrued vacation liability is recorded at year-end.

I. Employee Benefits and Indirect Costs

The District’s Employee Benefits and Indirect Costs are allocated based upon actual expenditures to all grants in

accordance with the Office of Management and Budget Circular A-87. The District’s employee benefits are allocated

to grant projects as a percentage of the District’s direct labor cost. Indirect costs necessary to sustain overall operations

are allocated as a percentage of total allowable direct costs charged to grant projects. Contribution to indirect costs

represent revenues that offset certain costs included in the Indirect Cost Pool

J. Budgetary Reporting

The District prepares an annual operating and capital budget, which is approved and adopted by the Board of Directors.

The budget serves as an approved plan to facilitate financial control and operational evaluation.

K. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenditures/expenses during the reporting period. Actual results could differ from those estimates.

L. Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions,

and pension expense, information about the fiduciary net position of the District’s California Public Employees’

Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have

been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including

refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms.

Investments are reported at fair value.




June 30, 2015

17

Note 2: Cash and Investments

Cash and investments at June 30, 2015, consisted of the following:

Napa County 719,365$

Imprest cash 300

Total cash and investments 719,665$

A. Investment in Government Pool

Investments are accounted for in accordance with the provisions of GASB Statement No. 31, which requires

governmental entities to report certain investments at fair value in the balance sheet and recognize the corresponding

change in fair value of investments in the year in which the change occurred. The District reports its investment in

the Napa County investment pool at fair value based on quoted market information obtained from fiscal agents or

other sources if the change is material to the financial statements.

The County has established a treasury oversight committee to monitor and review the management of public funds

maintained in the investment pool in accordance with Article 6 Section 27131 of the California Government Code.

The oversight committee and the Board of Supervisors review and approve the investment policy annually. The

County Treasurer prepares and submits a comprehensive investment report to the members of the oversight committee

and the investment pool participants every month. The report covers the type of investments in the pool, maturity

dates, par value, actual cost and fair value.

Note 3: Capital Assets

A summary of changes in capital assets for the year ended June 30, 2015, is as follows:

Balance Retirements/ Balance

July 1, 2014 Additions Adjustments June 30, 2015

Capital assets not depreciated

Land and right of way 350,100$ -$ -$ 350,100$

Capital assets, being depreciated:

Vineyard land improvements 32,340 - - 32,340

Computer equipment 25,812 - - 25,812

Hydrologic equipment 11,447 - - 11,447

Vineyard equipment and improvements 66,876 - - 66,876

Vehicles 5,778 28,614 - 34,392

Total capital assets, being depreciated 142,253 28,614 - 170,867

Less accumulated depreciation (93,211) - (13,387) (106,598)

Governmental activities, capital assets, net 399,142$ 28,614$ (13,387)$ 414,369$

Current year depreciation expense of $13,387 was charged.




June 30, 2015

18

Note 4: Long-Term Liabilities

The following is a summary of changes in long-term liabilities reported in the government-wide financial statements

for the year ended June 30, 2015:

Balance Retirements/ Balance Due Within

July 1, 2014 Additions Adjustments June 30, 2015 One Year

Governmental Activities

Loan payable 26,251$ -$ 8,512$ 17,739$ 8,752$

Net pension liability 630,553 630,553 -

Compensated absences 25,794 42,438 44,867 23,365 22,434

Totals 52,045$ 672,991$ 53,379$ 671,657$ 31,186$

The District’s Loan payable consist of a loan agreement with the State Revolving Fund Loan Program, dated May 23,

1997 and is due in annual installments of $9,248 on July 23 at an interest rate of 2.8%. The proceeds were used for

District improvements.

The annual requirements to amortize the loan as of June 30, 2015, are as follows:

Fiscal Year

Ending June 30, Principal Interest Total

2016 8,752$ 496$ 9,248$

2017 8,987 262 9,249

Totals 17,739$ 758$ 18,497$

Note 5: Net Position/Fund Balances

Net Position – Government-Wide Financial Statements

The government-wide financial statements utilize a net position presentation. Net position are categorized as net

investment in capital assets, restricted and unrestricted.

Net Investment in Capital Assets – This category groups all capital assets, into one component of net position.

Accumulated depreciation and the outstanding balance of debt that are attributable to capital assets reduce the

balance in this category.

Restricted Net Position – This category presents external restrictions imposed by creditors, grantors,

contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional

provisions or enabling legislation.

Unrestricted Net Position – This category represents net position of the District, not restricted for any project

or any other purpose.




June 30, 2015

19

Note 5: Net Position/Fund Balances (Continued)

Fund Balances – Governmental Funds

The District has adopted a policy for GASB Statement No. 54, Fund Balance Reporting. GASB 54 establishes fund

balance classifications that comprise a hierarchy based on the extent to which a government is bound to observe

constraints imposed upon the use of the resources reported in governmental funds. While the classifications of fund

balance in the District’s various governmental funds were revised, the implementation of this standard had no effect on

total fund balance.

Nonspendable – The fund balance includes those amounts that are not in a spendable form or are required to be

maintained intact. The District has recorded prepaid expense as Nonspendable fund balance.

Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws,

regulations, or enabling legislation which requires the resources to be used only for a specific purpose.

Encumbrances and nonspendable amounts subject to restrictions are included along with spendable

resources. The District has imprest cash as restricted fund balance.

Committed – The fund balance includes amounts that can be used only for the specific purpose determined by

a formal action of the government’s highest level of decision-making authority. The District has no committed

fund balance.

Assigned – The fund balance includes amounts intended to be used by the government for specific purposes.

Intent can be expressed by the governing body or by an official, or body to which the governing body delegates

the authority. In governmental funds other than the general fund, assigned fund balance represents the amount

that is not restricted or committed. The District has assigned fund balance for next years budget.

Unassigned – The fund balance is the residual classification for the general fund and includes all amounts not

contained in the other classifications. Unassigned amounts are technically available for any purpose.

Note 6: Defined Benefit Pension Cost-Sharing Employer Plan

A. General Information about the Pension Plans

Plan Descriptions – All qualified permanent and probationary employees are eligible to participate in the District’s

separate Safety (police and fire) and Miscellaneous (all other) Employee Pension Plans, cost-sharing multiple

employer defined benefit pension plans administered by the California Public Employees’ Retirement System

(CalPERS). Benefit provisions under the Plans are established by State statute and District resolution. CalPERS

issues publicly available reports that include a full description of the pension plans regarding benefit provisions,

assumptions and membership information that can be found on the CalPERS website.

Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost of living adjustments

and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years

of credited service, equal to one year of full time employment. Members with five years of total service are eligible

to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after

10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit,

or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified

by the Public Employees’ Retirement Law.




June 30, 2015

20


The Plans’ provisions and benefits in effect at June 30, 2015, are summarized as follows:

Prior to On or afterHire date January 1, 2013 January 1, 2013Benefit formula 2% @ 60 2% @ 62Benefit vesting s chedule 5 years service 5 years serviceBenefit payments monthly for life monthly for lifeRetirement age 55-60 52 - 67Monthly benefits , as a % of eligible 1.5% to 2% 1.0% to 2%Required employee contribution rates 7% 6.25%Required employer contribution rates 18.976% 6.25%

Miscellaneous

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer

contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on

the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on

an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to

finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded

accrued liability. The District is required to contribute the difference between the actuarially determined rate and the

contribution rate of employees.

For the year ended June 30, 2015, the contributions recognized as part of pension expense for each Plan were as

follows:

Contributions-employer 117,030$

Contributions-employee (paid by employer) -$

B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources

Related to Pensions

As of June 30, 2015, the District reported net pension liabilities for its proportionate shares of the net pension

liability of the Plan as follows:

Proportionate share of

Net pension liability

Miscellanous Plan 630,553$

The D i s t r i c t ’s net pension liability for each Plan is measured as the proportionate share of the net pension

liability. The net pension liability of each of the Plans is measured as of June 30, 2014, and the total pension liability

for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2013

rolled forward to June 30, 2014 using standard update procedures. The District’s proportion of the net pension

liability was based on a projection of the District’s long-term share of contributions to the pension plans relative to

the projected contributions of all participating employers, actuarially determined.

The District’s proportionate share of the net pension liability as of June 30, 2013 and 2014 was as follows:

Proportion - June 30, 2013 0.02265%

Proportion - June 30, 2014 0.02551%

Change - Increase (Decrease) 0.00286%




June 30, 2015

21


For the year ended June 30, 2015, the District recognized pension expense of $54,055. At June 30, 2015,

the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the

following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between expected and actual experience -$ -$

Changes of assumptions

Net difference between projected and actual earnings

on pension plan investments - (87,617)

Changes in proportion and differences between

District contributions and proportionate share of contributions 65,547 (8,507)

District contributions subsequent to the measurement date 117,030 -

Total 182,577$ (96,124)$

$117,030 reported as deferred outflows of resources related to contributions subsequent to the measurement date

will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported

as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension

expense as follows:

Measurement Period

Ended June 30:

2016 (10,523)$

2017 (9,576)

2018 (10,477)

2019 -

2020 -

Thereafter -

Actuarial Assumptions – The total pension liabilities in the June 30, 2013 actuarial valuations were determined

using the following actuarial assumptions:

Miscellaneous

Valuation Date June 30, 2013

Measurement Date June 30, 2014

Actuarial Cost Method Entry-Age Normal Cost

Actuarial Assumptions:

Discount Rate 7.50%

Inflation 2.75%

Payroll Growth 3.00%

Projected Salary Increase 3.3% - 14.2% (1)

Investment Rate of Return 7.5% (2)

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2013 valuation

were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011. Further details

of the Experience Study can found on the CalPERS website.




June 30, 2015

22


Discount Rate – The discount rate used to measure the total pension liability was 7.50% for each Plan. To determine

whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress

tested plans that would most likely result in a discount rate that would be different from the actuarially assumed

discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.50 percent

discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term

expected discount rate of 7.50 percent will be applied to all plans in the Public Employees Retirement Fund (PERF).

The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction for

pension plan administrative expense. The 7.50 percent investment return assumption used in this accounting valuation

is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An investment return

excluding administrative expenses would have been 7.65 percent. Using this lower discount rate has resulted in a

slightly higher Total Pension Liability and Net Pension Liability. CalPERS checked the materiality threshold for the

difference in calculation and did not find it to be a material difference.

CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM)

review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will require Board

action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of

administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal year. CalPERS will

continue to check the materiality of the difference in calculation until such time as we have changed our methodology.

The long-term expected rate of return on pension plan investments was determined using a building-block method in

which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment

expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term

market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’

asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-

60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the

present value of benefits was calculated for each fund. The expected rate of return was set by calculating the

single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated

using both short-term and long-term returns. The expected rate of return was then set equivalent to the single

equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated

using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return

are net of administrative expenses.

New Strategic Real Return Real Return

Asset Class Allocation Years 1-10 (1) Years 11+ (2)

Global Equity 47.0% 5.25% 5.71%

Global Fixed Income 19.0 0.99 2.43

Inflation Sensitive 6.0 0.45 3.36

Private Equity 12.0 6.83 6.95

Real Estate 11.0 4.5 5.13

Infrastructure and Forestland 3.0 4.5 5.09

Liquidity 2.0 (0.55) 1.05

(1) An expected inflation of 2.5% used for this period

(2) An expected inflation of 3.0% used for this period




June 30, 2015

23


Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following

presents the District’s proportionate share of the net pension liability for each Plan, calculated using the discount rate

for each Plan, as well as what the District’s proportionate share of the net pension liability would be if it were

calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Discount Rate -1% Current Discount Discount Rate +1%

(6.5%) Rate (7.50% (8.50%)

Misc Tier I 939,831$ 630,553$ 373,882$

Note 7: Deferred Inflows of Resources

Deferred inflows of resources (other than those accruing from pensions) in governmental funds arise when potential

revenue does not meet the “available” criteria for recognition in the current period. Deferred inflows of resources

(deferred revenue in accrual based statements) also arises when resources are received by the District before it has a

legal claim to them (i.e., when grant monies are received prior to the incurrence of qualifying expenditures).

Note 8: Restatement of Net Position

Beginning net position was restated because of the implementation of Governmental Accounting Standards Board

Statement 68 for defined benefit pension plans. The increase of the prior year net pension liability, deferred inflows and

deferred outflows of resources resulted in a $607,075 reduction to beginning net position.

Note 9: Risk Management

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and

omissions; injuries to employees; and natural disasters. The District is exposed to various risks of loss related to general

liability and workers’ compensation. Insurance for the District is secured through commercial insurance for both general

liability and workers’ compensation. Settlements have not exceeded insurance coverage in any of the last three years.

Note 10: Commitments and Contingencies

Grant Contingencies

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any

disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount,

if any, of expenditures that may be disallowed by the grantor cannot be determined at this time.

Contingent Liability

The District is a participant in the Cal-Card, credit card program administered by U.S. Bank. As of June 30, 2015 the

total credit limit available to 9 District employees was $54,000.

Commitments

At June 30, 2015 the District has open contracts related to professional service agreements.



REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE

GENERAL FUND

JUNE 30, 2015

The accompanying note to the required supplementary information is an integral part of this schedule

24

.

Variance

Favorable

Original Final Actual (Unfavorable)

Revenues

Taxes $ 262,600 $ 262,600 $ 282,949 $ 20,349

Intergovernmental 1,253,035 1,083,058 969,143 (113,915)

Use of money and property 120,000 133,000 137,579 4,579

Miscellaneous 23,500 19,500 20,317 817

Total Revenues 1,659,135 1,498,158 1,409,988 (88,170)

Expenditures

Salaries and benefits 995,044 938,519 894,018 44,501

Services and supplies 715,020 548,628 531,564 17,064

Debt Service

Principal 8,512 8,512 8,512 -

Interest 738 738 736 2

Capital outlay 29,000 29,000 28,614 386

Total Expenditures 1,748,314 1,525,397 1,463,444 61,953

Net Change in Fund Balance (89,179)$ (27,239)$ (53,456) (26,217)$

Fund Balance, July 1, 2014 825,649

Fund Balance, June 30, 2015 $ 772,193

Budgeted Amounts




SCHEDULE OF THE DISTRICT'S PROPORTIONATE

SHARE OF THE NET PENSION LIABILITY

JUNE 30, 2015


25

District's proportionate District's

share of the net pension covered-employee

Actuarial Valuation Date liability (asset) payroll

6/30/2014 90.68% 72.95%

Plan fiduciary net position

share of the net pension pension liability (asset) as a percentage as a percentage of

District's proportionate District's proportionate share of the net

liability (asset) of its covered-employee payroll the total pension liability

0.01013% $630,553 $695,347

The schedule is presented to il lustrate the requirement to show information for 10 years. However, until a full 10 -year trend is compiled, only information for those years for which information is available is presented.




SCHEDULE OF THE DISTRICT’S PENSION CONTRIBUTIONS

JUNE 30, 2015


26

Actuarial Valuation Date

6/30/2014

Contractually Contributions in relation to the Contribution District's covered Contribution as a percentage

$134,948 ($134,948) $0 $695,347 19.41%

required contribution contractually required contribution deficiency (excess) employees payroll of covered-employee payroll

The schedule is presented to il lustrate the requirement to show information for 10 years. However, until a full 10 -year trend is compiled, only information for those years for which information is available is presented.



Note to Required Supplementary Information

June 30, 2015

27

Budgets and Budgetary Accounting

The District is required to prepare a budget each year based on estimates of revenues and expected expenditures. The

budget is adopted on a basis consistent with U.S. generally accepted accounting principles. The legal level of

budgetary control is exercised at the budget unit (departmental) level. All changes to the budget during the year are

reflected in these financial statements and require the approval of the governing board. All unencumbered

appropriations lapse at the end of each fiscal year.

The budgetary data presented in the accompanying financial statements includes all revisions approved by the Board of

Directors.

28

LARRY BAIN, CPA An Accounting Corporation _______________________________________________________________________________________________________

2148 Frascati Drive, El Dorado Hills, CA 95762 / 916.601-8894

[email protected]

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Directors

Napa County Resource Conservation District

Napa, California

We have audited, in accordance with auditing standards generally accepted in the United States of America and the

standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller

General of the United States, the financial statements of the governmental activities of Napa County Resource

Conservation District (the “District”) as of and for the fiscal year ended June 30, 2015, and the related notes to the

financial statements, which collectively comprise the District’s basic financial statements, and have issued our report

thereon dated October 22, 2015 .

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District’s internal control over

financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for

the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion

on the effectiveness of Napa County Resource Conservation District’s internal control. Accordingly, we do not express

an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal

control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will

not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination

of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention

by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and

was not designed to identify all deficiencies in internal control that might be material weaknesses or significant

deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given

these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be

material weaknesses. However, material weaknesses may exist that have not been identified.

mailto:[email protected]

29

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Napa County Resource Conservation District’s financial

statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws,

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on

the determination of financial statement amounts. However, providing an opinion on compliance with those

provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our

tests disclosed no instances of noncompliance or other matters that are required to be reported under Government

Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the

results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on

compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards

in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any

other purpose.

This report is intended solely for the information and use of the board of directors, management, Napa County Auditor

Controllers Office and the Controller’s Office of the State of California.

Larry Bain, CPA,

An Accounting Corporation

October 22, 2015

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